Oil prices fall on OPEC output increase, rising US crude stocks

Oil prices fall on OPEC output increase, rising US crude stocks

WTI was trading up 0.8% at $46.45 per barrel at 3:11pm EST-more than $1.50 per barrel lower than a week ago-with Brent trading at $48.74, compared to $50.05 per barrel last week.

Data from the American Petroleum Institute showed on Tuesday that usa crude stocks rose by 2.8 million barrels in the week to June 9 to 511.4 million, compared with expectations for a decrease of 2.7 million barrels.

LONDON, June 14 (Reuters) - Oil prices fell on Wednesday after industry data showed a build in US crude stocks and OPEC reported a rise in its production despite a pledge to cut output.

Crude prices have fall by more than 10 percent since late May, pulled down by a supply glut that persists.

Adding to the supply surplus is rising US production from shale drillers that has pushed USA output up by 10 percent over the past year to 9.3 million bpd, not far below levels by top exporter Saudi Arabia, Reuters reported.

Those efforts thus far have largely not succeeded.

"Although oil prices rebounded from five-month lows in (mid-May), following positive United States jobs data and assurances by Saudi Arabia that Russian Federation is ready to join OPEC in extending production adjustments to reduce a persistent supply glut", OPEC said in its monthly report.

OPEC's monthly report showed output from the group rose by 336,000 bpd in May to 32.14 million bpd, led by a recovery in Nigeria and Libya which are exempt from supply cuts. Prices have averaged higher so far this year, at around $51.8 a barrel. The report said the market was rebalancing at a "slower pace".

Nevertheless, increased output in the USA was getting in the way of the rebalancing process, OPEC complained.

Trade data show Opec shipments to customers averaged around 26 million bpd in the last six months of 2016 and are set to average around 25.3 million bpd in the first half of this year.

The last time this happened, in mid-2014, it was a precursor to a massive selloff in oil that dropped Brent from US$108 a barrel to about US$47 a barrel in the span of five months.

Indeed, the U.S. Energy Information Administration reports that shale production will jump again in July by 127,000 bpd to 5.5 million bpd, with the biggest gains coming from the Permian basin in west Texas.

Meanwhile, U.S. drilling activity has continued apace RIG-OL-USA-BHI, driving up U.S. output C-OUT-T-EIA by more than 10 percent since mid-2016 to above 9.3 million bpd.

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